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Analysis

L.A. Care CEO Discusses Enrollment Increases, Policy Future

By Jack O'Brien  
   February 15, 2019

CEO John Baackes talked about the payer's recent success, the removal of the individual mandate, and the potential impact of statewide policy pursued by Gov. Gavin Newsom.

During the most recent ACA open enrollment period, L.A. Care Health Plan, the nation's largest publicly operated insurer, added at least 26,000 new enrollees to finish 2018 with nearly 71,000 covered lives, according to CEO John Baackes. By the time Covered California ended, the state's open enrollment period that lasts until January 31, L.A. Care eclipsed 87,000 members. 

According to Baackes, 21,000 members have already paid their first month premium and L.A. Care approached a 90% renewal rate for its members, consistent with its experience in 2017 when it finished the year with 25,000 covered lives.

Competing in a robust Southern California payer marketplace as part of a state tinkering with its overall approach to providing health insurance, including state leadership considering a move towards single-payer coverage, L.A. Care has managed to post steady growth in recent years. 

Baackes told HealthLeaders in a phone interview that L.A. Care eclipsed its internal expectations for adding 10,000 new members, which was a low estimate due to the removal of the individual mandate penalty, thanks to the insurer's low price point compared to the competition.

"We see this now as a small cornerstone part of our business," Baackes said.

Marketing and getting the word out

Marketing was another key factor in L.A. Care's efforts to expand coverage, as the payer augmented its efforts alongside the substantial marketing budget of Covered California, even though the Trump administration has reduced its marketing budget appropriations for the ACA open enrollment period since 2017. 

Baackes said L.A. Care's years-long rebranding effort, revolving around the tagline "Elevating Healthcare in Los Angeles County," was coupled with a targeted advertising campaign in areas where the insurer felt it could make inroads with community's looking for affordable coverage.

While the Medi-Cal product, which is the largest portion of L.A. Care's business according to Baackes, auto-enrolls its members, the insurer realizes the need to engage in "aggressive promotion" tactics to make the most of the open enrollment period because it is ultimately a voluntary choice.

Baackes added that providers in the area can no longer ignore L.A. Care, as it operates in Medi-Cal, Covered California, and offers a dual eligible Medicare product as well.

"What we're seeing from providers is that they're more interested in talking to us now than they would have years ago when we were just considered a Medi-Cal plan," Baackes said. "Now that Medi-Cal is so big and because we are in these other products, we do not have any difficulty with provider. It's no longer, 'we don't want to deal with you,' it's 'all right, how can we work with you.'"

Single-payer in the Golden State?

When it comes to Gov. Gavin Newsom's ambitious healthcare goals for the state, most notably his aim to implement a single-payer program, Baackes said L.A. Care is "delighted" and is "applauding from the sidelines."

He commended the governor's push for a state tax to mimic the prior individual mandate penalty that was stripped away as part of the federal tax reform bill passed in 2017 and became effective this year.

Baackes also praised Newsom for expanding coverage to undocumented young adults as well as creating another subsidy tier for citizens between 400% and 600% of the federal poverty level. 

Related: L.A. Care Awards $3.6M for Physician Recruitment

On the federal level, Baackes said he and others on the payer side remain confident that efforts on Capitol Hill to repeal and replace the ACA are over, but did say he is following the ongoing appeal of the circuit court ruling late last year that found the landmark healthcare law unconstitutional. 

In conversations with HHS Secretary Alex Azar and CMS Administrator Seema Verma, Baackes said there is agreement about the need to "increase flexibility, reduce regulation, and reduce costs," though there is disagreement about the promotion of individual enrollment on the federal exchanges.

"And far more important to L.A. Care is how they treat Medicaid," Baackes said. "We're watchful and they're open to talk about the Medicaid program and ways to improve it."

"I don't think we'll have any legislative things to worry about, because I don't think anything will get done legislatively, but CMS could do things that are good or bad through their regulatory authority," Baackes added. "At the moment, I would say you can go talk to them, and that's the most important thing so we can have that dialogue." 

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Though the majority of L.A. Care's business comes from its Medi-Cal program, its seen growth in the individual marketplace as well.

CEO John Baackes attributes this to a low price point and an aggressive advertising campaign. 

Baackes also praised Gov. Gavin Newsom's healthcare policy goals for California, including a push towards a single-payer program.


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